MarketBites Daily Investment Commentary: Media Consolidation Continues I Retail Update

Stock Market Commentary for 5/17/2021:
  • Stock Talk:

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Top Investment Story #1: AT&T Looks To Consolidate Further
What is Happening?:

AT&T is expected to announce a deal on Monday that would spin its WarnerMedia asset, including CNN and other notable cable staples, to Discovery.

Why Does This Matter:

In 2018, AT&T became the most indebted non-financial firm in the United States after acquiring WarnerMedia for $81B. Now that the firm is facing increased competition in its core business unit, and the landscape of traditional media is rapidly changing, it appears AT&T regrets their purchase.

This new deal is expected to include CNN, TNT, and TBS. AT&T has had multiple opportunities to sell CNN over recent years, but during the Trump presidency, the network posted impressive numbers and gained the top spot for total viewership across all cable networks. That has since changed, as Fox News reclaimed the #1 ranking this year. AT&T will retain HBO and HBO MAX.

For Discovery, the added assets can potentially help them build a more robust streaming offering. Discovery+ has struggled in its early stages. The service offers its staple nature-documentary catalog, along with popular HGTV and Food Network programming. With the potential addition of CNN, TNT, and CBS, the firm may be able to include exclusive sports streaming options and news specials on the platform.

AT&T investors have long called for the firm to sell its media assets. The company has become a massive conglomerate, being pulled in all directions by its rapidly growing debt. The stock has fallen 25% since 2016, and bulls hope that ridding the firm of its media burden will allow AT&T to put all of their energy into telecom.

The Takeaway:

This story is still developing. Monetary specifics behind the deal has yet to be established publicly. Such news will most certainly impact the direction in which both stocks move early this week. The good news is, investors believe that this deal makes sense for both AT&T and Discovery, should they announce its completion in the coming days.

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– By Raymond Kanyo

– Published in MarketBites Daily Newsletter

Meet the Authors
Top Investment Story #2: Retail Labor Imbalance
What is Happening?

The recent pandemic has exposed a shortage of digital skills in retailing. Tens of thousands of retail workers were laid off one year ago, as Covid-19-related restrictions required chains to close stores.

Why Does This Matter?

Once the drastic change in retail across multiple industries struck, many companies were left hanging out to dry. Countless companies went out of business, while many thrived. What lead to the night and day differences seen across these various industries? It all boiled down to adaptability.

Companies like Choice Market launched checkout-free shopping in April. This allowed shoppers to scan items on an app and leave the store without interacting with a cashier. This may seem logical and easier upfront, but they actually had to retrain their employees. A former cashier had to learn an entirely new skillset to stay employeed.

Instead of staffing a cash register, employees used a computer to create detailed drawings of the store layout, so the system knows where products sit on shelves and then monitors what is being sold. Employees also needed to be proficient in the platform that integrates Choice’s third-party delivery systems, with Uber Eats and GrubHub.

Companies like Verizon and Walmart plan to implement retraining for thousands of employees with the plan to change the path of their retail business.

The Takeaway:

The pandemic continues to change the way businesses operate, and the task of having to retrain employees to take business in a different direction could be challenging. Keep an eye on retail companies as they begin to implement new methods and strategies.

By Jack Dunne

– Published in MarketBites Daily Newsletter

Raymond grew up in Budapest, Hungary, where he played tennis for the Hungarian Junior Davis Cup team. At the age of 16, he received the Davis United World College Scholarship, which was established by legendary investor Shelby Cullom Davis, allowing him to attend the Taft Boarding School in Watertown, CT. After Taft, Raymond received a Presidential Scholarship to the Robins School of Business at the University of Richmond, where he studied Quantitative Economics and Finance. Raymond is a CFA Level III Candidate. Prior to joining Taylor Hoffman, Raymond worked at various financial institutions in the insurance, asset management, and financial consulting space. Outside of the office, Raymond enjoys playing tennis at ACAC and Westwood Country Club.

Raymond Kanyo
Product Manager & Investment Analyst

Jack graduated from the Robins School of Business at the University of Richmond with concentrations in Marketing and Finance in 2019. Prior to joining Taylor Hoffman, he worked in high-growth B2B SaaS marketing; assisting Fortune 100 firms to improve their web performance experience. A Long Island New York native, Jack’s hobbies include passionately supporting the Mets and Islanders, and he enjoys skiing whenever he can.

Jack Dunne
Investor Education Specialist
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